The major objective of our proposed research is to develop an economic model of the market for residents in the United States. We propose to estimate equations for the market, as well as to measure the actual work for which residents are demanded through time-motion analysis. At the present moment, almost 50,000 physicians are training in residency programs in the United States. For the most part, this largely unstudied pool of medical manpower is pursuing costly specialty training at a time when policy makers perceive shortages in the availability of primary care and possible excess supplies of a number of specialists. The large vacancy rate in residency positions offered by hospitals, dramatically rising resident salaries, and an influx of foreign medical graduates suggests that an excess demand for residents exists on the part of hospitals. Hypotheses central to this study are: (1) that this excess demand for residents indeed exists; (2) that it derives from the requirements of hospitals for the patient-care and ancillary services of residents; and (3) that the specialty distribution of this excess demand exists without regard to the specialty manpower requirements of the United States. This study proposes to analyse the market for residents through data tapes supplied by the National Intern and Residency Matching Program of the American Medical Association. The import of this study derives from the fact that health manpower legislation now pending in Congress portends to restrict the ability to offer residency positions and to radically alter the current market for residents. Without in depth research to suggest viable policy alternatives on the current workings of this market, the potential for irreparable damage from this legislation is great.